Recently, there has been a consistent increase in the use of Cayman funds formed as Cayman exempted companies. The use of Cayman companies (as opposed to ELPs) in the traditional collateral capital call deal has given rise to the need for some unique structures.

Any proposed security over a Cayman exempted company’s right to draw down outstanding capital commitments from its shareholders differs significantly from the arrangements which have become common practice in relation to securing capital call rights of Cayman ELPs.

Unlike a traditional ELP capital call financing, where the capital call rights are a contractual obligation which can be assigned by way of security, the “contractual rights collateral package” in corporate subscription deals is typically linked to the obligations of the company (acting through its directors or investment managers) to issue shares. The creation of an obligation of the investors in the company to purchase shares “to-be-issued” in the future is different from the obligation of an investor in an ELP to fund the remainder of its commitment to the ELP as part of its existing interest and creates enforcement concerns and additional insolvency risks.

Read More

Type

Insight

Locations

Cayman Islands

Share
Twitter LinkedIn Email Save as PDF
More Publications
27 Sep 2022

Similar but Different

While the basic features of the trust remain, there are some notable differences in how trusts can b...

30 Aug 2022

The Cayman Islands restructuring officer regime comes into force on 31 August 2022

These new proceedings will significantly enhance the Cayman Islands restructuring regime.

4 Aug 2022

Norwich Pharmacal orders: the right medicine for third party disclosure of information and documents in the Cayman Islands

A Norwich Pharmacal order (NPO) is a disclosure order available in the Cayman Islands to compel a th...

Contributors: Susan Fallan
1 Jun 2022

The 2022 Cayman Islands Real Estate Guide

The Real Estate 2022 guide provides the latest legal information on the impact of disruptive technol...

Contributors: Norman Klein
28 Apr 2022

Restructuring the offshore debt of Chinese Real Estate Developers

This article sets out how the current regimes in the Cayman Islands and the BVI can assist with rest...

Contributors: Crystal Au-Yeung
28 Apr 2022

Assignment, novation or sub-participation of loans             

Transfers of loan portfolios between lending institutions have always been commonplace in the financ...

26 Jan 2022

Appleby contributes four chapters to Global Legal Insights – Fund Finance 2022: Cayman Islands

2021 has been an incredibly impressive year for the global subscription credit and fund finance mark...

Contributors: Georgina Pullinger
27 Oct 2021

We hope this registers! A summary of Cayman corporate and partnership registers in a finance transaction.

Because we know that it can be a little befuddling, Appleby has set out a guide to the various Cayma...

7 Oct 2021

Regulatory Round-Up: Cayman Islands Q3 2021

Appleby Cayman’s Our latest Regulatory updates for the Cayman Islands up to Q3 2021.

13 Sep 2021

Loans & Secured Financing in the Cayman Islands 2021

First published in Getting the Deal Through 2021. This practice guide provides topical analysis of L...

Contributors: Alexandra Simpson